Kemper plant should be reconsidered

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Published: May 16,2010

Tags: Kemper, MBJ letter to the editor

Editor,

As a businessman in South Mississippi, I feel the need to explain why the recent decision of the Public Service Commission on the Kemper County generating plant makes it impossible for Mississippi Power to finance and construct the plant.

I hesitated to come forward because I am a member of the Mississippi Power Company board of directors, but I now feel this gives me a unique view of the matter.  I also feel my experience as president and chief executive officer of Hancock Bank allows me to speak from an important point of view — as a lender.  While there are several reasons in the Commission’s decision that would make it impossible for Mississippi Power to finance and build the plant, I will only comment on the most important one.

Several years ago, the Mississippi Legislature recognized it would be essential for utilities to build new, large and very costly baseload generating units to serve our state.  To encourage this construction, the Legislature allowed rates to be collected during the construction period.  This would allow the utility sufficient cash flow during construction to obtain financing.  As a lender, I can assure you this cash flow is a requirement in order to obtain financing.  Just as important, this method would save the customers 20 to 25 percent on their rates over the long run.

Similar rate provisions have been implemented in many other states, most recently in Georgia.  All of these jurisdictions have correctly assessed the realities that exist in today’s credit markets and provided the measures which are necessary to ensure adequate power is available in the future.  I hope Mississippi can do the same.

Mississippi Power Company cannot afford to finance or build this Kemper plant without using this legislatively approved method, and customers will not get the benefits of the savings from the plant without it.  These are principles of finance which apply equally in almost every large financial transaction, not just electric power plants.

I hope that this explanation helps everyone, including the Public Service Commissioners, understand this important issue; and I urge the Commission to reconsider their order.

Carl J. Chaney

President & CEO, Hancock Holding Company & Hancock Bank

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3 Responses to “Kemper plant should be reconsidered”

  1. Julia O'Neal Says:

    Similar rate provisions have been enacted in Georgia because the same crew of Southern Company lobbyists overwhelmed the Georgia legislature just as they did in Mississippi.

    $2.4 billion for 200 jobs? And a 14,000-acre strip mine that will destroy the streams that form the headwaters of the Pascagoula River?

    The solar panel plant in Senatobia will cost $175 million and provide 500 jobs. Southern Company continues to oppose every renewable energy initiative. Existing but currently idle natural gas generating plants, implementation of efficiencies, and the Energy Policy Act of 2005′s revisions to PURPA would meet future energy requirements at a much lower cost.

    Southern Company is making a lousy business decision, as Moody’s pointed out when it lowered the bond ratings based on the Kemper plant.

  2. Julia O'Neal Says:

    The reason Georgia has a “similar rate provision” is that the same crew of Southern Company lobbyists overwhelmed the Georgia legislature, as they did Mississippi’s.

    The Kemper plant provides only 200 permanent jobs for $2.4 bil. The Senatobia solar panel plant will cost $175 million and provides 500 jobs.

    Southern Company opposes any and all renewable energy programs–even though it produces greenwash ads and has a minor solar project with Ted Turner, which is largely PR.

    Georgia Tech did a study that shows the Southeast could do without any new power plants for the next ten years by simply increasing customers’ efficiency. Existing, currently idle, natural gas generating plants and implementation of the five new PURPA standards (of the Energy Policy Act of 2005) would provide for future energy needs at a much lower cost. Southern Company made a bad business decision by deciding to build Kemper, and Moody’s lowered SO’s bond rating because of it.

    It’s asking too much of greedy corporations, but Mississippians should have the foresight to assess the opportunity costs of destroying the headwaters of the Pascagoula with a 14,000 acre strip mine.

  3. Barbara J Correro Says:

    I live 1.2 miles from the proposed site. There were many people here in the pathway. Not many spoke up or out. Folks just let it ride until the very last minute. Too late. However, our own voted-in Public Service Commission panel members aside from Presley voted for the coal plant. There are going to be a few people such as Bill Clay, a local land owner, that will make a lot of money. I wonder what others are going to make? Some people say to me: Move. Where are you going to move when your land and home are paid for and you are retired and your organic garden took years to perfect? Our United States is slowly becoming contaminated because we do not speak up and out for the environment. Look at the BP mess in the Gulf. If you ask the BP representatives anything – no comment. If you ask the Southern Company questions anything -no comment. However, as Louie Miller states: “If their lips are moving” they are lying.

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